All three major US indices fell Thursday, with the tech-rich Nasdaq Composite Index dropping nearly three percent.
Microsoft and Meta topped earnings estimates but saw their share prices drop -- more than six percent and four percent, respectively -- after signalling plans to increase AI investments.
Apple reported revenues that narrowly beat analyst expectations, sending shares lower in after-hours trading even as the company enjoyed a boost from iPhone sales.
"Asian markets are bracing for a fragile Friday, with high and climbing bond yields chomping at the heels of risk assets, rising AI costs and gloomy forward outlooks pumping the brakes on the mega-cap Big Tech rally," said Stephen Innes, managing partner of SPI Asset Management.
"After the S&P and Nasdaq logged their sharpest one-day losses in two months, don't count on Wall Street sending over any positive vibes."
Analysts have been watching the rise in US Treasury bond yields, with expectations the Federal Reserve may back off major interest rate cuts amid US economic data that has generally been solid.
Just days away from the US election on Tuesday, data showed the Fed's preferred inflation measure cooled further in September -- and now sits just above the central bank's long-term target of two percent.
But the figures failed to boost sentiment, despite being a positive sign for future rate cuts.
The Fed is expected to authorise a second cut at the end of its policy meeting next week, following a cut in September.
The cost of living in the United States has been a central campaign issue in the coin-toss race for the White House between Vice President Kamala Harris and former president Donald Trump.
"Markets have already priced in some risks of a second Trump presidency as they await the US presidential election," Lloyd Chan, an analyst at MUFG Global Markets Research, said in a note.
"A victory for Trump would likely hurt the outlook for Asian economies and FX via lower trade and investment, as well as the Fed potentially slowing the pace of rate cuts due to the inflationary consequences of Trump's proposed economic policies (tariffs + wider fiscal deficits)."
Investors are also awaiting fresh data on jobs, another key issue for American voters.
US employment figures to be released Friday are expected to show 100,000 jobs added last month, Bloomberg reported.
In Asia trade, Tokyo's Nikkei was down more than two percent.
Hong Kong was up while Shanghai fell following healthy gains by mainland Chinese markets Thursday, after a forecast-beating manufacturing report.
Taiwan stocks were down as markets reopened after one of the biggest typhoons to hit the island in decades killed at least two people, caused flooding and landslides and shuttered schools and offices.
Seoul, Sydney, Wellington, Singapore, Jakarta and Manila were all down while Kuala Lumpur ticked up. Bangkok was flat.
London, Paris and Frankfurt rose at the open.
Oil prices also rose -- WTI was around $71 per barrel -- following reports that Iran was planning a major retaliatory strike on Israel.
- Key figures around 0820 GMT -
Tokyo - Nikkei 225: DOWN 2.6 percent at 38,053.67 (close)
Hong Kong - Hang Seng Index: UP 0.9 percent at 20,506.43 (close)
Shanghai - Composite: DOWN 0.2 percent at 3,272.01 (close)
London - FTSE 100: UP 0.3 percent at 8,135.97
Euro/dollar: DOWN at $1.0858 from $1.0883 on Thursday
Pound/dollar: UP at $1.2908 from $1.2896
Dollar/yen: UP at 152.57 yen from 152.00 yen
Euro/pound: DOWN at 84.12 from 84.38 pence
Brent North Sea Crude: UP 2.4 percent at $74.57 per barrel
West Texas Intermediate: UP 2.6 percent at $71.07 per barrel
New York - Dow: DOWN 0.9 percent at 41,763.46 (close)
bur-sco/lb
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